Nonprofit Leaders Debate Question of Disclosing Demographic Data

Should Congress require foundations to disclose information about how much they give to help the poor and minorities?

During the annual meeting here of the Philanthropy Roundtable, an association of donors, two nonprofit leaders clashed over this question.

Aaron Dorfman, executive director of the National Committee for Responsive Philanthropy, a foundation-watchdog group in Washington, argued that new regulations are needed to improve philanthropy.

Calling foundations “some of the most loosely regulated organizations” in the country, Mr. Dorfman said charitable funds should be required to publicly state their governance policies and share demographic data about what populations their grants benefit.

According to a study his organization plans to release next year, only one-third of giving by large foundations benefits “marginalized communities,” a term that includes impoverished people, members of racial and ethnic minorities, disabled people, and women.

Too much charitable money goes to “patronage giving” that only serves the elite of society by supporting arts institutions and universities, he said. “Philanthropy is an underperforming national treasure,” he said.

But Heather R. Higgins, president of the Randolph Foundation, in New York, strongly disagreed with Mr. Dorfman, saying the government should not support one type of giving over another.

“Under the law, the only rule is to be charitable,” she said about foundation giving. “We don’t say some charity is more equal than another.”

Yet federal and state lawmakers have expressed concerns similar to Mr. Dorfman’s. In California, state legislators proposed last year a bill that would have required philanthropies to make public the ethnic and racial composition of their staff and board members, and of their grantees. After 10 big foundations in the state agreed to provide more funds to minority-led organizations, the legislation was withdrawn.

But members of Congress, most notably Rep. Xavier Becerra, a Democrat from California, have said they may introduce disclosure rules similar to the ones proposed in California.

Mr. Dorfman described the California effort as a “noble, but flawed” idea that could be revised at the federal level. He said disclosure requirements would not threaten the freedom of grant makers to decide which causes to support, but simply would provide a window into what philanthropy is doing. He compared them to the Food and Drug Administration’s rule that food products be labeled with nutritional information. “Let me be clear: I don’t believe that politicians should decide where foundation dollars go any more than I believe the government should mandate how much protein should be in a frozen pizza,” he said.

Ms. Higgins argued that such federal rules would discourage wealthy people from setting up philanthropies in America.

“Under the guise of punitive transparency laws,” she said, “if you bureaucratize philanthropy, if you raise legal fear in the people who are involved in it, if you compromise the joy and personal fulfillment that comes from spontaneity, innovation, opportunity, and the sense that you act efficiently and are actually making a difference, then you will have killed the goose that produces those golden eggs.”

She also took umbrage at Mr. Dorfman’s assertion that the public has a right to information about grant makers because the organizations are exempt from most taxes and their founders receive a tax deduction for donating to them. “The government forgoes substantial revenue to grant preferential tax treatment to foundations and that revenue could ostensibly be used to meet societal needs. The public then has to bear the burden of that lost revenue,” Mr. Dorfman said, estimating that 45 percent of grant makers’ assets would be lost without their tax benefits.

Ms. Higgins countered: “While you can serve different public purposes with an exempt organization, it still doesn’t make it public money.” She added, “This argument, that subsidized money makes it public money, is to say that giving an exemption or a charitable deduction to a religious organization is the same as establishing a religion, which it is not. It’s a very slippery use of language.”

Despite the debate, the two did find common ground.

Both said all of the money generated by the excise tax, a federal tax on foundations’ net investments, should support federal oversight of philanthropies, and that foundations should exclude administrative expenses from the calculation they use to determine whether they meet the federal requirement to distribute 5 percent of their assets to charity each year.

Held shortly after the presidential election, the Philanthropy Roundtable’s meeting frequently touched upon what Barack Obama’s leadership will mean for the United States and philanthropy. Adam Meyerson, the president of the Washington association, described the election of Mr. Obama as a “momentous” occasion for the country. The fact that a black American son of a Kenyan farmer could rise to the highest office in the land “is an inspiring and quintessentially American story,” Mr. Meyerson told the 400 or so philanthropists and foundation leaders at the event.

But he also cautioned that Mr. Obama would probably propose policies that would expand the federal government. “That is not our approach at the Philanthropy Roundtable,” he said.

The association does not oppose all government programs to, say, help the poor or improve education, but is concerned that some of them deter volunteerism and “neighbors helping neighbors,” he said.

Mr. Meyerson also said he is concerned about the financial crisis, which has eroded foundation assets, some as much as 20 to 30 percent. Despite the losses, he urged grant makers to help cash-strapped charities. “We encourage donors to be generous, contingent with their long-term objectives.”

With Democrats set to control the White House and Congress in 2009, conservative think tanks told participants at the conference that they are rethinking their programs and plan to do more to educate Americans about national-security issues, concerns about the country’s growing debt, and so-called free-market ideas.

Edwin J. Feulner, president of the Heritage Foundation, said his Washington think tank is starting a 10-year program to teach people about the country’s “first principles.”

For example, it has sent one million copies of the Declaration of Independence and the Constitution to people nationwide. In addition, Heritage is attempting new ways to communicate its message, such as releasing in January a documentary about the threat of a nuclear missile strike from North Korea or Iran.

While the Republican loss in the presidential election was disappointing, he said, it did not mean Americans had embraced liberal views. “Republican does not mean conservative,” he said. “Yes, we’re off course, but I have little doubt we’ll get back on course.”

The highlight of the meeting for many participants was a three-course dinner and introduction to the Prison Entrepreneurship Program — complete with hip-hop performance.

During the meal, Catherine Rohr spoke about how she established the program, in Houston, which teaches hardened criminals how to run a business, reconnects them with their families, and offers them housing and other services when they leave incarceration.

After touring a prison in 2003, the former Wall Street investor said she heard a call from God to help the inmates find work after prison. Sheemptied her savings account to start the organization, but in moving to Texas, her moving truck was stolen with all her possessions.

Despite such setbacks, she has turned the charity into a $2.5-million organization and plans to expand the program to other states.

It was one of the program’s graduates, Sam Amaya, who stole the show. Mr. Amaya, a musician who has started a record label, performed a rap song about the charity. With beats blaring, he loosened his tie and sang “PEP in Your Step,” a song that plays on the program’s acronym:

I was looking for the Lord and he sent me an angel in the form of Catherine Rohr, Who could ask for more, She equipped me with a sword I’m swinging it bringing anything to lead me out the struggle of the poor.

Ever the entrepreneur, after the event, Mr. Amaya sold CDs for $10 apiece. He sold all 50 of them, donating 10 percent of the profit to Ms. Rohr’s charity.

More items about the conference are available on The Chronicle’s Web site.